Dallas Debt Settlement Company Discusses Options for Credit Card Debt

Debt Settlement America addresses a few options facing consumers overwhelmed by credit card debt.

debt-settlement-america.com - August 12, 2009

(PRNewsChannel) / Dallas, Texas / So many consumers are facing financial crises due to the economic downturn, personal crises, loss of work and a multitude of other factors rampant in our society today.  We see and hear advertisements daily with headlines such as “get help with debt”, “get out of debt fast”, “settle your debt for less”, or “don’t get pulled into debt settlement scams”.  For the consumer who is truly facing a hardship in life that has put them in a desperate financial position, these advertisements can appear to be the answer they have been so eagerly awaiting – but a Dallas debt settlement company says the questions seemingly promising a solution might not be the best answer to credit card debt and other unsecured debt.

With so much information out there promising consumers the answer to their financial woes, how is the average consumer, under stress, supposed to be able to determine the best action to take for his/her situation? Debt Settlement America provides the following look at the options for someone overloaded with unsecured debt.

Self-Help – For some people, they can get themselves back on track. They simply need to know what steps to take and follow through on setting up and maintaining a budget.  Some of the questions you can ask yourself include the following:
• Can you double up on your payments?
• Can you cut back on expenses sufficient to pay more on your debt?
• Can you get a 2nd job?
If any of these answers are yes, handling the debt yourself is the best option.
   
Bankruptcy – For some consumers, chapter 7 or 13 bankruptcy may be the answer.  If you qualify for chapter 7 generally your unsecured debt is completely written off, however due to the new bankruptcy laws qualifying for chapter 7 it is difficult for many people and you could lose some significant assets such as your house. Chapter 13 bankruptcy generally sets up a payment plan that pays back many of your debts as determined by a court appointed trustee. You pay the trustee/court monthly, and the trustee then pays your creditors.  The completion rate on chapter 13 bankruptcy is 33% and there are restrictions on refiling. A bankruptcy attorney should be consulted if you are considering this option.

Loans – An unsecured consolidation loan is the perfect solution for people with a good credit rating and an income high enough to offset their debt.  Another loan option is a home equity loan.  If you are a home owner, a home equity loan can pay off your credit card balances in exchange for a lower interest loan. However, if you don’t do some plastic surgery, meaning cutting up your cards and changing your spending habits, you may end up in a worse position within 3-5 years and put your home in jeopardy. Rule of thumb here is - if you can’t afford the debt you currently have, you are a bad candidate to acquire new debt. 

Consumer Credit Counseling Service – Under this option, an organization (typically touted as a “non-profit”) will consolidate your bills into one monthly payment and lower interest rates. If your interest rates are currently set at more than 20%, this can be a good program to pay your balances off earlier. This program has payments about the same as what you’re currently making to your creditors, sometimes more. The completion rate on this type of program is about 21-26% and looks very similar to a chapter 13 bankruptcy on your credit report. Both are considered third party interventions.

Hardship Program – This program type is typically referred to as debt settlement or negotiated settlement. This can be a good program for people who cannot afford their current monthly payments, are falling behind or do not qualify for or want to file for bankruptcy. Many feel that not paying their creditors anything is something they can’t either morally or spiritually do. While a reduction in principal is the only way many people will ever get out of debt, this is an aggressive debt relief option that has its own risks including continued collection activity by creditors and a high dependence on consumer discipline in saving money for settlements.

If you have more questions regarding your debt, your options, or about a hardship debt settlement program, contact a Certified Debt Consultant at Debt Settlement America, for a free consultation.

Feel free to contact the Dallas debt settlement company at www.debt-settlement-america.com or 1-866-387-3328.

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